New research has quantified exactly how much of a disincentive insurance taxes are, finding they stand in the way of $36 billion in household insurance alone.
The Insurance Council of Australia commissioned Sapere Research Group to investigate what effect insurance tax abolition would have on domestic insurance rates.
The research found removing state government stamp duties and levies on insurance would encourage almost 250,000 additional households to take out contents insurance, reducing non-insurance by 10%.
Similarly, an extra 38,400 householders would take out home (building) insurance, dropping non-insurance rates by almost a quarter.
The ICA has calculated that these changes would boost the value of protected assets by $36 billion.
ICA CEO Rob Whelan says: “It reinforces the findings of numerous government and independent reports that conclude state taxes on insurance are unfair, inefficient and regressive, and serve as a disincentive for many households to be properly insured.
“When households lack proper insurance cover, the burden of repairing their lives when something goes wrong, such as a natural disaster, falls to governments and community groups. Governments spend hundreds of millions of dollars every year on disaster recovery.
“If governments remove these taxes, more Australians will be protected by their insurance. The message to State and Federal Treasurers is simple: Be farsighted, and help your communities by removing taxes on insurance.”
The ACT is currently the only state or territory working towards phasing out stamp duties.